The topic of EMV is not new among the POS and merchant processing industry. But while the discussion has lost a bit of steam, the opportunity for merchant processing and point-of-sale vendors hasn’t.

It is no secret that the adoption rate for EMV has been slower than expected. What is more surprising is the number of merchants who still do not understand what EMV is or the risks that are involved with not accepting chip cards. The industry as a whole has seen an influx of fraudulent chargebacks due to consumers who are now savvy enough to identify merchants who do not accept EMV. Cardholders looking to take advantage of merchants who still swipe has become more common costing merchants millions of dollars a year in indisputable chargebacks.

EMV BY THE NUMBERS

Since the EMV liability shift in October 2015, the EMV conversion rate among merchants has been slower than expected. According to EMVCo, the percentage of card present EMV transactions for the year of 2018 stood at 53.5%, an increase from 41.2% in 2017.  This is much different than the transaction rates in Canada and Mexico they are more than 93%.

WHY HAVEN’T MERCHANTS SWITCHED?

For many merchants, the thought of installing machines and changing their business practice can seem daunting and expensive. It is common for some merchants to have looked into implementing EMV only to find out that their POS will require a costly upgrade. The best approach for these types of merchants is education. It is important for them to know there are options available that will fit their budget and eliminate a bulk of their chargebacks.

HOW TO EDUCATE MERCHANTS ABOUT EMV

The first thing a merchant must understand is that implementing EMV does not have to be as costly as their POS company might have quoted them. It helps if the merchant familiarizes themselves with EMV and understands the risks and costs associated not accepting chip and pin transactions.

First, What is EMV and Why is it Important?

EMV is a global standard for credit cards that uses computer chips to authenticate rather than the magnetic strip on the back of the credit card. Unlike the magnetic strip, the information on the EMV chip is encrypted and virtually impossible to replicate. This reduces the risk of fraudulent cards being created.

After the liability shift in 2015, issuing banks who categorize transactions as fraudulent immediately look to see how the card was accepted. If the card was swiped at the POS/credit card terminal, the bank will immediately rule in the cardholder’s favor leaving the merchant unable to fight the chargeback. If the card was “dipped” (an EMV transaction”), the cardholder can not rule the charge as fraudulent as the merchant tool the necessary steps to eliminate the risk, and a chargeback will not be issued.

Understanding the Return on Investment

Before you look into the best way to implement EMV, it would be best to understand the merchant’s return on investment. What is their average ticket size? Monthly volume? Number of chargebacks they see a month? For some low volume merchants, you may find the cost of implementing EMV does not justify the savings of avoiding chargebacks. But for the majority of merchants, the savings can be exponential over time.

For example, say a merchant who does $20K a month in volume with an average ticket of $30 sees four fraudulent chargebacks a month. The inability to fight these chargebacks could result in $120 a month in lost revenue and another $80 in chargeback fees. Not to mention, there is a trend where consumers are taking advantage of merchants and running up large tabs then simply calling in a fraudulent transaction leaving the merchant left covering the bill. For these types of merchants, the cost of EMV terminals would pay for themselves over the course of 2-3 months.

Ease of Implementation

The merchant must know is that there are options for implementation that more than likely fit their budget.

Point of Sale- Semi-Integrated

The majority POS systems offer semi-integrated solutions (a separate pin pad next to the POS machine for running credit cards). There are many benefits to this as the merchant is still able to run transactions through their system and the POS is taken “out-of-scope” when it comes to PCI requirements. You can learn more about semi-integrated solutions in the Pax Integration FAQs on BOLD’s University page.

Point of Sale- Non-Integrated

If the merchant is running a POS that does not offer EMV in a semi-integrated environment, there are also options to run the credit cards on a separate machine outside of the point-of-sale. While this is not ideal and can alter their business process/reporting, it does offer a cost-effective approach to avoiding chargebacks.

Stand Alone Terminals

If the merchant does not use a POS system, it is important for them to know that the cost for EMV enabled terminals is minimal. Many merchant processors and POS companies offer the credit card hardware for free as an added benefit of going with their merchant services.

Merchants have begun to feel the effect of and are looking for choices. It is a good time to open up a discussion with businesses looking for a change by offering information and solutions that fit their needs and budget.

If you have more questions about EMV or are interested in the hardware/software packages that we provide our partners, feel free to fill out the form below and a BOLD. representative will contact you shortly.

Even the best POS systems go down. It is not a matter of if, but when. Preparation and practice for this type of event is key. The best thing a business can do is to get ahead of the situation to mitigate the damage and reduce the financial impact.

Rather than business coming to a halt, it is best for the management team to have a plan in place. Management and staff should be aware of the backup process in the event they are left without a POS system. Below are some ideas one may want to cover if they are ever affected by a system down situation.

TROUBLESHOOTING THE INTERNET

Before contacting the point of sale or merchant processing company, the first thing the business will want to determine if it is it a network or POS issue. Some things to consider while troubleshooting:

1. Determine if the issue is internet or POS/server related? More times than not, an internet outage can be the culprit of major POS problems. A simple way to check the internet would be to simply try to open a website on a computer using the same network as your POS system. If the site has trouble opening, some steps for troubleshooting would be:
   1. Plug a laptop/computer directly into the modem provided by your Internet Service Provider (ISP).
      1. If internet issues still persist, try restarting the modem or contacting your ISP for resolution.
      2. If internet is available at the modem, try to access websites from a computer plugged into the router/switch provided by your POS provider or network specialist. A simple power cycle of the router/switch can correct a network issue, however it is highly recommended that this is done with the POS company on the phone.
2. If internet is available throughout the business, the next thing to determine if all terminals are affected or just one?
   1. If one terminal is affected, it may be something as simple as a loose cable either at the POS switch/router or at the terminal itself.
   2. If all terminals are affected and it is determined that it is not an internet issue, it would be best to involve the POS company at this point as it may be an issue involving the POS server or the router itself.

PUT A BACKUP PLAN IN PLACE

Not only should the business have a WRITTEN backup plan in place if it ever finds itself without a POS system, it also helps to make sure the entire staff is trained on how to handle a system-down situation. Some things to consider in your system-down procedures are:

Have a Handwritten System Documented and Put in Place

It is best to develop and have a handwritten ticket system documented before any major catastrophe hits. Management and employees should also periodically be trained on how to use this system.

• For restaurants, this will include steps for a manual ticket process. The staff should know how to create a ticket at the table, turned it into the kitchen, and total the check amount to bill the customer. It would be a good idea to have an inventory of manual tickets in stock that are numbered so all payments/orders can be accounted for at the end of the shift.
• For retail, it will help to record every sale with UPC/Skew number and cross reference these items on the credit card/cash slip provided to the customer.

Ask Your POS Company and Learn How to Use Offline Mode

Many POS systems support an offline mode for accepting credit cards while the internet or server is down. This allows the business to continue to run normally (including running credit cards through the system), however cards are only being stored in the system until the internet comes back online. The business does run the risk of accepting a card that declines at a later time, however the risk may outweigh the reward of not having to go to a manual process.

Alternative Sources for Accepting Credit Cards

Many merchant processing companies offer mobile payment/gateway solutions (For Example: MX Express) that will allow businesses to still authorize credit cards outside of the POS system. It would be a good idea to preemptively create all of the user accounts needed, log into each device, and record these usernames/passwords in a secure location. Businesses should also know which phone(s) will have the mobile payment app on them. Be sure to login and test the system periodically to make sure there are no surprises when the system is needed. Aside from the mobile payment piece, many merchant processors also provide a gateway (For Example: MX Merchant) that can be used online if mobile phones are not available.

Keep in mind that if payments are recorded in another application, such as authorizations on a mobile phone, they will need to be recorded in the POS system. It is best to have a payment method button on the POS system that will still close the table/check, record the order number, and track the payment type.

If a mobile payment or gateway option is not available from the merchant processor, the next best option is to have “knuckle busters” and payment slips available. Similar to offline mode, the merchant will run the risk of accepting a card that may be declined later.

Know Who to Call and for What

It is also a good idea to have a document available with important phone numbers for management to call in a system down situation. Resources to consider are:

• The point-of-sale company
  • Sales Rep Contact Info
  • Support Phone Number
  • Escalation (if available)
• Credit Card Company
  • Sales Rep Contact Info
  • Support Phone Number
  • Escalation (if available)
• Networking company
  • If available, company that installed the network system
• Voice Authorizations phone numbers for VISA, Mastercard, Discover, and American Express

Look into Failover/Backup Internet

Many companies offer internet over 4G that can be installed near the router/modem. In the event of an internet outage, the system will automatically detect the internet is down and rollover to the back up 4G signal. This is ideal as it will have minimum disruption to the operation and the merchant can continue to authorize credit cards.

If a situation ever comes up where the merchant finds themself without a point-of-sale, preparation and training will be key. Make sure everyone knows who is responsible for what and that the process is clearly documented and available. While hoping or the best is good, it is always best to prepare for the worst.